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Test your basic knowledge |
AP Microeconomics
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Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Marginal Revenue Product (MRP)
Derived Demand
Productive Efficiency
Marginal Product of Labor (MPL)
2. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good
Income Elasticity
Perfectly inelastic
Public goods
Diseconomies of Scale
3. Ed = 1
Constant Returns to Scale
Producer surplus
Relative Prices
Unit elastic demand
4. The marginal utility from consumption of more and more of that item falls over time
Monopoly long-run equilibrium
Law of Diminishing Marginal Utility
Law of Increasing Costs
Total Product of Labor (TPL)
5. Ei = (%dQd good X)/(%d Income)
Normal Profit
Price elasticity
Income Elasticity
Implicit costs
6. Models where firms agree to mutually improve their situation
Increasing Cost Industry
Collusive oligopoly
Unit elastic demand
Total Welfare
7. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Scarcity
Variable inputs
Complementary Goods
Price elasticity
8. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Total Fixed Costs (TFC)
Shutdown Point
Collusive oligopoly
Determinants of Supply
9. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Determinants of Supply
Non-collusive oligopoly
Luxury
Price elasticity
10. Costs that change with the level of output. If output is zero - so are TVCs.
Monopoly long-run equilibrium
Collusive oligopoly
Total variable costs (TVC)
Monopolistic competition
11. The rational decision maker chooses an action if MB = MC
Price inelastic demand
Marginal Product of Labor (MPL)
Determinants of elasticity
Marginal Analysis
12. Entry of new firms shifts the cost curves for all firms upward
Total Fixed Costs (TFC)
Increasing Cost Industry
Variable inputs
Accounting Profit
13. The price of a good measured in units of currency
Average Variable Cost (AVC)
Negative externality
Absolute prices
Income Elasticity
14. Ei > 1
Specialization
Luxury
Price floor
Unit elastic demand
15. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Explicit costs
Private goods
Least-Cost Rule
Derived Demand
16. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Marginal tax rate
Market Economy (Capitalism)
Non-collusive oligopoly
Least-Cost Rule
17. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Explicit costs
Substitution Effect
Dead Weight Loss
Absolute Advantage
18. AVC = TVC/Q
Economies of Scale
Average Variable Cost (AVC)
Total Welfare
Marginal Cost (MC)
19. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Total Fixed Costs (TFC)
Absolute prices
Substitute Goods
Normal Profit
20. Entry of new firms shifts the cost curves for all firms downward
Market Economy (Capitalism)
Consumer surplus
Decreasing Cost industry
Total variable costs (TVC)
21. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Non-collusive oligopoly
Variable inputs
Marginal Productivity Theory
Marginal Revenue Product (MRP)
22. Ed = 0 - no response to price change
Excess Capacity
Perfectly inelastic
Total Welfare
Price floor
23. Ed = 8 - infinite change in demand to price change
Opportunity Cost
Long Run
Diseconomies of Scale
Perfectly elastic
24. ATC = TC/Q = AFC + AVC
Increasing Cost Industry
Average Total Cost (ATC)
Economies of Scale
Spillover costs
25. Total product divided by labor employed. APL = TPL/L
Productive Efficiency
Price inelastic demand
Market Equilibrium
Average Product of Labor (APL)
26. The imbalance between limited productive resources and unlimited human wants
Relative Prices
Break-even Point
Scarcity
Monopoly long-run equilibrium
27. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.
Economics
Substitution Effect
Law of Supply
Public goods
28. AFC = TFC/Q
Subsidy
Average Fixed Cost (AFC)
Break-even Point
Total Revenue
29. The additional cost incurred from the consumption of the next unit of a good or a service
Marginal Cost (MC)
Price floor
Cartel
Luxury
30. Exists at the point where the quantity supplied equals the quantity demanded
Scarcity
Market Equilibrium
Monopoly long-run equilibrium
Accounting Profit
31. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Price floor
Private goods
Implicit costs
Spillover costs
32. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Fixed inputs
Substitute Goods
Marginal Product of Labor (MPL)
Necessity
33. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Natural Monopoly
Law of Demand
Producer surplus
Perfectly competitive long-run equilibrium
34. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Free-Rider Problem
Law of Demand
Resources
Consumer surplus
35. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Comparative Advantage
Profit Maximizing Rule
Income Elasticity
Free-Rider Problem
36. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Free-Rider Problem
Total Fixed Costs (TFC)
Shortage
Income Elasticity
37. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Constrained Utility Maximization
Positive externality
Substitute Goods
Dead Weight Loss
38. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Average Variable Cost (AVC)
Excess Capacity
Substitute Goods
Long Run
39. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Inferior Goods
Excise Tax
Marginal Benefit (MB)
Normal Profit
40. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Marginal Analysis
Demand for Labor
Spillover benefits
Negative externality
41. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good
Law of Supply
Specialization
Unit elastic demand
Perfectly inelastic
42. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Specialization
Price elastic demand
Productive Efficiency
43. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Excess Capacity
Diseconomies of Scale
Monopolistic competition long-run equilibrium
Substitute Goods
44. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Break-even Point
Perfectly competitive long-run equilibrium
Variable inputs
Spillover benefits
45. Exists if a producer can produce more of a good than all other producers
Non-collusive oligopoly
Subsidy
Absolute Advantage
Spillover costs
46. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Utility Maximizing Rule
Short run
Perfect competition
Marginal Product of Labor (MPL)
47. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Monopoly long-run equilibrium
Negative externality
Marginal Revenue Product (MRP)
Demand for Labor
48. Ed > 1 - meaning consumers are price sensitive
Price inelastic demand
Total Welfare
Price elastic demand
Absolute prices
49. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Determinants of elasticity
Accounting Profit
Negative externality
Marginal Productivity Theory
50. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Substitution Effect
Fixed inputs
Cartel
Cross-Price Elasticity of Demand